Construction Engineering 221 Cost Estimating and Bidding

Construction Engineering RPQs 1. Lump-sum and unit-price estimates are forms of fixed-price estimates. A = True B = False 2. The “bidding climate” refers to the anticipated weather conditions during the duration of a project. A = True B = False 3. An employee of a contractor pays $450 per month for his/her portion of the medical insurance. This is an example of a contractor’s indirect labor costs. A = True B = False

Construction Engineering RPQ #1 1. Lump-sum and unit-price estimates are forms of fixed-price estimates. A = True B = False The correct answer is A = True

Construction Engineering RPQ #2 2. The “bidding climate” refers to the anticipated weather conditions during the duration of a project. A = True B = False The correct answer is B = False

Construction Engineering RPQ #3 3. An employee of a contractor pays $450 per month for his/her portion of the medical insurance. This is an example of a contractor’s indirect labor costs. A = True B = False The correct answer is B = False

Construction Engineering Important Estimating Principle Become thoroughly familiar with the bid documents. Why?

Construction Engineering Because……. Accurate quantity takeoff of material Accurate quantity takeoff of labor Determine general and project overhead What equipment will be needed and when

Construction Engineering More Reasons…… Begin the formation of a project schedule Determine how project will be managed Develop a list of questions (get answers) Begin a relationship with owner/AE

Construction Engineering What Must Happen…… In the arena of competitive bidding for a contractor to stay in business? AND In the arena of negotiated bidding what must happen in order to continue to attract clients to the negotiated process?

Construction Engineering Estimating Is Very Important In the competitive arena Need to be low bidder on sufficient number of projects to maintain a revenue base And realize a reasonable profit to stay in business. In the negotiated arena Reliable advanced cost information that will become the “project cost”

Construction Engineering Fixed-Price Estimate Forms Lump-Sum Estimates Building construction Nature of work and quantities will defined Great for owner – financing and risk Unit-Price Estimates What type of construction is normally bid using unit- price estimates? Nature of work is still well defined Quantities of material or work items not precise Who first determines quantities of work items? Quantities shown for each work item.

Construction Engineering Estimate Foundation What is the term use to describe a complete listing of all the materials and items of work that will be required for a project? (foundation to a good estimate) Quantity survey or quantity take-off

Construction Engineering Bidding Procedures Private – procedures (rules and regulations) normally established by owner and AE Public – procedures follow various procurement statutes developed by federal, state, county and municipal governments

Construction Engineering QUESTION ? Why do we have public bidding statutes (laws)? Public bidding statutes are designed to protect the public interest, not that of the contractor or AE. Their essential purpose is to protect public funds; prevent fraud, collusion, and favoritism; and obtain quality construction at reasonable and fair prices.

Construction Engineering Decision to Bid The decision to bid by the contractor depends on the bidding climate. What is meant by “Bidding Climate”? The bidding climate is the affected by: 1.Bonding capacity considerations 2.Location of project 3.Severity of contractual terms (contractor responsibilities and liabilities) 4.Owner and their financial status 5.Who is the architect/engineer 6.Nature and size of project as it relates to company experience and equipment 7.Labor conditions and supply 8.Completion date

Construction Engineering The Bidding Period Why is a reasonable bidding period important? 1.An accurate bid requires adequate time 2.Too little time to bid results in contractors either not bidding or bidding too high 3.Result of “rushed” or “quick” bids is NOT a lower price 4.When unsure, contractors add CONTINGENCY $$$$$$$ to their bid

Construction Engineering Preparing a Bid Preliminary Considerations Become familiar with Instruction to bidders Proposal form Alternates General and supplementary/special conditions Drawing and specifications (addenda) Form of the contract Prebid meeting (in-house) Prebid meeting (with owner)

Construction Engineering Preparing a Bid (cont.) Jobsite visit Observe job site specific conditions that must be covered in the bid (site access, logistics…) Bid invitations Quantity surveys (take-offs) Unit-price project (AE’s #’s vs contractors) Experience needed to do quantity surveys? General contractor’s cost estimate of own work

Construction Engineering Bid Components Material Costs – anything that becomes a part of the finished structure Material Allowance – What is it? Example? Direct Labor costs Basic wage rates of the labor categories Production rate that applies to the work type The largest areas of uncertainty Where is the most reliable labor productivity information to found? HISTORICAL COST DATA